The third quarter of 2022 ends and the industrial real estate sector has continued to be driven by constant increases in demand originating under the pressure of multiple companies that see a safe bet when settling in Mexican territory.

The expansions dominate the scene without leaving behind new investments that seek to establish their operations in Mexico to be able to manufacture or store products as close as possible to the United States favored by the T-MEC that has already been in operation for a year plus a quarter. The strategy of outsourcing production to third parties with access to more competitive raw materials and energy has been key in driving industrial demand in recent quarters.

The economic conditions have favored the country that takes advantage of the interest rate differential between Mexico and the United States, after the recent increase approved by the US in recent days. Banxico also unanimously announced again the increase in the interest rate by 75 base points, reaching the highest point in the modern history of the bank, registering 9.25%, thus creating the scenario for a relatively stable behavior of the peso.

However, these measures will impact economic growth, so the combination of these indicators can tip the balance and favor real estate investments in the medium and long term.

One of the indicators that most stands out in the quarter is the vacancy that reaches historical minimums where half of the markets monitored by Solili are located at levels below 1.5%. Guadalajara, Tijuana, Ciudad Juárez y Tecate reach the lowest percentages at the national level with 0.7%, 0.4%, 0.4% and 0.3%, respectively, which compromises the stability of rental prices in the short term.

In absolute terms, the largest available surfaces are located in Mexico City, Guanajuato and Monterrey, where we find vacant spaces of 382, 355 and 217 thousand square meters, respectively. However, these vacant areas represent in percentage terms 2.2% for Mexico City, 1.5% in the case of Monterrey and 5.5% for Guanajuato, which is the market with the highest percentage of vacant spaces nationwide.

Gross demand becomes another trigger for this market that manages to exceed 2.1 million square meters for the quarterly closing, a figure 11% higher than that registered in the third quarter of 2021. Mexico City becomes, once again, in the leading market at the national level, with a demand above 620 thousand square meters that had been contained during the months of July and August and that is placed above Monterrey at the quarterly close.

In the eight border markets that Solili monitors, half of the demand is concentrated and the capital of the country takes center stage, accumulating almost a third of the national total.

The Bajío also reported a boost in gross demand, participating with almost 20% of the total, where the markets of Querétaro and San Luis Potosí were the most active, registering 230 and 114 thousand square meters, respectively.

The country's industrial inventory grew by just over 1.2 million square meters, which represents a growth of almost 2% quarterly. This inventory increase was strongly driven by markets such as Mexico City and Monterrey, mainly, and followed by Querétaro and Guanajuato.

During this quarter, the construction of just over 1.3 million industrial square meters began, which represents 77 new industrial buildings. Construction activity exceeds by 61% what was in progress in the same quarter of 2021 and closes with more than five million square meters nationwide. Monterrey looks unstoppable and concentrates almost 30% of the number of ships that are built in Mexican territory with more than a million and a half industrial projects.

The northern markets continue to lead in construction with 64% of the total, where construction is advancing at a good pace in Tijuana, Saltillo, Ciudad Juárez and Reynosa, which, like Monterrey, are trying to meet the strong demand but are unable to maintain stable vacancy and it goes down faster and faster.

The shoal stands out in an important way, increasing its participation in industrial constructions with 22% of the total, mainly due to the participation of Guanajuato, which rises with 350 thousand square meters of new industrial buildings, driven mainly by manufacturing companies. Guadalajara has been another market where 50% more is being built than what was seen a year ago.

In terms of rents, prices at the national level have continued to rise and markets such as Ciudad Juárez and Reynosa register annual increases of over 20%, while Monterrey and Mexico City present average rent adjustments of 16% and 8%, respectively. 

Industrial rental prices are growing in all markets, derived from an increase in demand, vacancy rates at historical lows and the increase in construction costs. This indicator will continue to rise since the projects under construction have starting prices that are 15% lower than those reported at the end of 3Q 2022.

Developers from both the capital of the country, as well as the main cities of the border and the lowlands, are now tilting the balance towards speculative construction favored by the ideal scenario of incremental rental prices and scarce vacancies, which has created significant competition even in the midst of a macroeconomic scenario of high volatility where the winners were those who, having finished their warehouses, have before them a range of tenants.

The 3Q 2022 was marked by trends that had been present since the beginning of the year, which are summarized in strong increases in inventory, strong decreases in vacancy rates, prices pressured upwards, construction that increases, especially in a market where land is not are scarce, and strong increases in demand for industrial space.

Most of the country's markets have the ideal market conditions for investment in the industrial real estate segment to continue growing and for the demand of companies that are exploring new locations and spaces to be satisfied.